Tax Competition at State Borders

Do local taxes fall or rise as a function of distance to the nearest state border? This is one of the research areas of CES visiting scholar David Agrawal, the results of which are published in his recent paper in International Tax and Public Finance: “Games within Borders: Are Geographically Differentiated Taxes Optimal?”

Mr Agrawal’s research agenda focuses on theoretical and empirical ways of incorporating spatial relationships into models of tax competition. His most recent work examines how variation in Internet penetration affects municipal sales-tax rates. Additional work analyses how the strategic reaction to vertical externalities varies within a federation if the federal government has multiple horizontal competitors. He has also studied the optimality of preferential tax zones near state and international borders.

David Agrawal is Assistant Professor in the Department of Economics of the Terry College of Business at the University of Georgia. He completed his PhD in Economics at the University of Michigan (2012) after completing a Masters in Public Policy (MPP) from the University of California, Berkeley (2007) and his undergraduate studies at the University of Connecticut (2005). Mr Agrawal received the IIPF Peggy and Richard Musgrave Prize in 2011 and the IIPF Young Economists Award in 2012.

This text is the responsibility of the writer and does not necessarily represent the opinion of the authors of the paper featured.